Playing defense - but at a price?

Loren Thompson, chief operating officer of the Lexington Institute, is a defense insider’s insider — and sometimes a controversial one.

In the world of billion-dollar-plus defense contracts, information about their fate is critical. Thompson trades in advice and tips about military fighter jets, bombers, ships and ground vehicles, while promoting the larger issue of defense spending.

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Reporters, including this one, have turned to him for tips, analysis and on-the-record confirmation of deals going down at the notoriously tight-lidded Pentagon. In fact, a 2008 study by the Center for Economic Policy and Research rated the otherwise obscure Lexington Institute second in its rankings of the most widely cited think tanks, based on the size of their budgets; the more renowned Brookings Institution is fifth.

“It’s all about sources,” Thompson told POLITICO in an e-mail, later elaborating by phone. “I have information about things that others do not have,” he said.

Just this week, Thompson noted, he was quoted in two big defense contracting stories.

Bloomberg News reported that Defense Secretary Robert Gates will add two years to the life of the Marine version of the F-35 Joint Strike Fighter, funding for which had been in doubt. The second, more speculative piece appeared in the Mobile, Ala., Press-Register, saying the Air Force’s decade-long effort to buy a new fleet of aerial-refueling tankers was all but decided in favor of the European Aeronautic Defence and Space Co.

Still, Thompson often draws criticism that his opinions come for a price.

The 501(c)(3) Lexington Institute doesn’t disclose its donors. But Thompson said it receives contributions from defense giants Lockheed Martin, Boeing, Northrop Grumman and others, which pay Lexington to “comment on defense.”

The institute brought in $2.4 million in 2009, according to its financial statements. Thompson proposes projects to its clients, such as one he wrote earlier this year denouncing subsidies received by the European Union, an argument used by Boeing for bouncing its competitor EADS from the effort to win the $35 billion tanker contract.

Thompson also heads the for-profit defense consulting firm Source Associates, which he said offers “proprietary insights and intelligence.” For example, Thompson said, he met this week with strategic planners from a major aerospace company to talk about options for looming cuts to the defense budget.

So how does one business influence the other?

Thompson insists there is no influence because the nature of what he’s providing in each case is different, though he readily acknowledges: “The information is mingled together in my head.”

A Harper’s Magazine story last April took Thompson to task for promoting his private defense clients in the public domain.

“Outfits like Lexington produce the press conferences, position papers and op-eds that keep military money flowing to defense contractors. Thompson has no qualms about this,” wrote Harper’s Ken Silverstein.

But Thompson said that he doesn’t always come down on the side of his clients. This year, for instance, he advised scrapping Boeing’s C-17 cargo jet program. When it comes to the tanker contract, however, he makes no gesture toward neutrality.

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CORRECTION: Corrected by: Bob Hillman @ 12/13/2010 03:45 PM
Corrected by: Bob Hillman @ 12/13/2010 03:03 PM
Correction: This story was updated to specify the Lexington Institute was second in the 2008 Center for Economic Policy and Research study of how frequently think tanks are cited in the media, based on the size of their budgets. The center derived its rankings based on a larger Fairness and Accuracy and Reporting study of how often news organizations cite think tanks, in which the Brookings Institution placed first and Lexington 21st.